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Carbon Emission Fees for Flights Upheld

PARIS — The European Union’s highest court on Wednesday endorsed the bloc’s plan to begin charging the world’s biggest airlines for their greenhouse gas emissions starting Jan. 1. The move sets the stage for a potentially costly trade war with the United States, China and other countries.

A group of United States airlines had argued that forcing them to participate in the potentially costly emissions-trading system infringed on national sovereignty and conflicted with existing international aviation treaties.

But in a final ruling, the European Court of Justice in Luxembourg affirmed an opinion issued in October by its advocate general, who had rejected that claim.

“The court confirms the validity of the directive that integrates aviation activities in the system for trading emissions quotas,” the ruling said. It added that the plan “infringes neither the principles of customary international law at issue, nor the Open Skies agreement” concluded with the United States in 2007.

The court’s decision comes amid increasing pressure from some of the biggest trading partners of the 27-member bloc to suspend or amend application of the legislation to expressly exclude non-European Union countries — at least initially. Failing that, several governments have vowed to take their own legal action or retaliate with countervailing trade measures.

Although airlines for now will receive most of the permits they will need free, the European Union estimates that ticket prices could rise by as much as 12 euros ($15.65) on some long-haul flights to cover the cost of the additional permits required.

Airlines for America, an industry lobby group and one of the plaintiffs in the case, said that its members would be required to pay more than $3.1 billion to the European Union from 2012 to 2020. It said its members would comply with the system under protest but would also review options for pursuing the case in Britain’s High Court, which had referred the original complaint to the European court in 2009.

“The court did not fully address legal issues raised and has established a damaging and questionable precedent,” the airline group said in a statement.

In a letter dated Dec. 16, Hillary Clinton, the United States secretary of state, and Ray LaHood, the secretary of transportation, said Washington would be “compelled to take appropriate action” if Brussels proceeded, though the letter did not specify what form that might take.

In a statement on Wednesday, Krishna R. Urs, the State Department’s deputy assistant secretary for transportation affairs, expressed Washington’s disappointment but did not broach the subject of retaliation.

“We continue to have strong legal and policy objections to the inclusion of flights by non-E.U. air carriers” in the system, Mr. Urs said. “We do not view the court’s decision as resolving these objections.”

He added: “The path the E.U. has chosen is hampering progress towards a multilateral solution that is more likely to bear fruit in terms of concrete progress in limiting greenhouse gas emissions from aviation.”

The court’s decision, and the pressure from Washington, leave American airlines in an uncertain legal limbo, particularly following a bill approved this year by the House that would bar them from participating in the European system.

China has also made known its displeasure with the European directive. This year it threatened to suspend purchases of jets made by the European manufacturer Airbus if Chinese airlines were included. A group of Chinese carriers has also threatened to bring a lawsuit, possibly in Germany, where the authorities will oversee the application of the system to several Chinese airlines.

Experts say the Chinese could argue that the European law violates the Kyoto climate agreement by requiring airlines from developing nations, which are exempt from emissions cuts under the treaty, to bear the same burdens as carriers from wealthier nations.

Algeria has already begun a case in France contesting the system, according to the Arab Air Carriers Organization, an industry group that includes the country’s main carrier, Air Algérie.

Exempting foreign airlines, however, would anger European carriers that would still be required to participate.

“European airlines and the European economy must not get caught in the political crossfire or be put at a competitive disadvantage,” Mike Ambrose, director general of the European Regions Airline Association, said. “If these tensions erupt into full-scale trade conflict, there will be no winners — least of all the environment.”

The European initiative involves folding aviation into the six-year-old emissions trading system, in which polluters can buy and sell a limited quantity of permits, each representing a ton of carbon dioxide. The legislation requires that airlines account for their emissions for the entirety of any flight that takes off from — or lands at — any airport in the bloc.

The goal, European officials have said, is to speed up the adoption of greener technologies at a time when air traffic, which represents about 3 percent of global carbon dioxide emissions, is growing much faster than gains in efficiency.

Governments and airlines have been in negotiations for more than a decade over the creation of a global cap-and-trade system under the auspices of the International Civil Aviation Organization, an arm of the United Nations. The organization’s 190 member states passed a resolution in 2010 committing the group to devising a market-based solution, though without a fixed timetable.

Impatient with the pace of those talks, the European Commission moved ahead with its own plan, which was passed two years ago with the support of national governments and the European Parliament.

At an I.C.A.O. meeting last month, 26 member states, including China, Russia and the United States, formally showed their dissatisfaction with the European system — a sign that they could push for a formal dispute procedure at the organization.

European officials have said repeatedly that they would prefer a multilateral solution and are prepared to amend their cap-and-trade system if and when the I.C.A.O. reaches a global aviation emissions agreement.

The ruling clears the way for the European system to take effect next month. However, airlines will not have to hand over the first batches of emissions permits until the spring of 2013 to compensate for flights made in 2012. That could leave room for a compromise to be negotiated over the next year.

The emissions rules apply from the moment an aircraft begins to taxi from the gate, either en route to or from a European airport, and they cover emissions for the flight from start to finish — not just the portion that occurs in European airspace.

According to Airlines for America, on a typical flight from San Francisco to Heathrow Airport in London, 29 percent of the total emissions take place in United States airspace. A further 37 percent occurs in Canadian airspace and 25 percent over the high seas. Less than 9 percent of the emissions from such a flight would actually take place in European Union airspace.

In its ruling, the court noted that the European directive did not apply “as such” to aircraft flying over the high seas or over the territory of the member states of the European Union or third countries.

“It is only if the operators of such aircraft choose to operate a commercial air route arriving at or departing from an airport situated in the E.U. that they are subject to the emissions trading scheme,” the court said.

James Kanter contributed reporting from Brussels.

A version of this article appears in print on December 22, 2011, on page B1 of the New York edition with the headline: Carbon Emission Fees for Flights Upheld. Order Reprints|Today's Paper|Subscribe